LITTLE ROCK, Ark. - Wal-Mart lawyers argued before the Arkansas Supreme Court on Thursday that the retailer should be allowed to break a multimillion-dollar retirement package with a former executive because he acknowledged defrauding the company. But a lawyer for former vice chairman Tom Coughlin said a lower court dismissal of Wal-Mart's claim should stand, as Coughlin didn't defraud the company while in negotiations for his retirement agreement. Lawyers in the case say the package is worth between $12 million and $15 million.
Coughlin attorney William W. Taylor III said in a perfect world, no company or person would have to sign contracts when "unaware" of potential liabilities.
"But that's not the real world and that's not what these parties wanted to do," Taylor said.
Coughlin worked for Wal-Mart Stores Inc. for 28 years, a protege of company founder Sam Walton. Coughlin retired in January 2005.
By April 2005, Wal-Mart disclosed it was suspending Coughlin's benefits amid allegations that the former executive used Wal-Mart money and gift cards to pay for a slew of personal items, from hunting trips and hunting dog training to clothes, alcohol and parts and service for personal vehicles.
Coughlin pleaded guilty to fraud and tax charges in federal court and began serving a 26-month home detention in October.
Bentonville-based Wal-Mart filed a circuit court lawsuit to cut Coughlin's retirement benefits, but a judge dismissed the suit. Theodore Boutrous, a lawyer for Wal-Mart, told the state Supreme Court that Coughlin had a "duty of loyalty and candor" to the company to be honest as he sat down in retirement negotiations.
"He knew that if he told the truth, he wouldn't get a retirement package," Boutrous said. "If he told truth, he would be terminated. And so he lied."
Boutrous said concealment of theft should be enough to void Coughlin's retirement package.
The court is expected to issue a decision on Wal-Mart's appeal in the coming weeks. Meanwhile, Coughlin faces another hearing April 12, when the 8th U.S. Circuit Court of Appeals in St. Louis will hear an appeal by federal prosecutors calling for a harsher sentence for his fraud and tax convictions.
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